New Frontiers in How to Understand Fundraising

							 New Frontiers in
How to Understand
   Fundraising
                 Anna Breman
         Stockholm School of Economics
A European Seminar on Civil Society and Governance
               September 25, 2007
Outline
1.     The Economics of Altruism
         Why do Economist care about charity?
         Theory

2.     Fundraising
         Why fundraising?
         Methodology

3.     What has been tested and what works?
        Laboratory experiments
        Field experiments

4.    Unexplored fields for future research

5.    Conclusions
The Economics of Altruism
”Why do Economist care about charity?”
   Why would people give away their hard-
    earned money?

   A science based on self-interested behavior
    cannot easily accommodate behavior that is
    seemingly altruistic

   Vast majority of people contribute to charity
Theory
   Giving to charity is like any other good
       Depend on income and cost of giving

   Give to achieve status, insurance, future
    consumption

   Theory of warm-glow giving “impure altruism”
    (Andreoni, 1989, 1990)
       Altruistic: care about others
       Feel good about giving
Why study fundraising?
   Better understanding when and how people
    are willing to make contributions
       Help charities raise money
       Government tax policies for foreign aid


   Help economist to make better model of
    altruistic behavior
Methodology
   Influenced by research methods in medicine and psychology

   Experimentally test a treatment
        Laboratory experiments
        Field experiments

   A control group and one/several treatment groups

   People are randomly assigned to control and treatment groups

   Randomized controlled experiment is relatively easy to analyze
    statistically
Laboratory experiment
   People are recruited to participate in an experiment (often student)

   Participants are given a sum of money ($10-20) and ask to decide how to divide
    the money between themselves and and a recipient (for example a charity)

   Compare how much was given in different treatment groups

   Disadvantages:
        Unnatural environment.
        Participants are given the money.


   Advantages:
        Control over the experiment and the information given to participants
        Can test questions that cannot be tested in the field (unethical, difficult to implement)
Field experiment
   In collaboration with charities, real donors are randomly assigned to control and
    treatment group

   Donors are contacted by phone or letters and asked to give money to a charitable
    cause

   Compare how much was given in different treatment groups using statistical
    methods

   Disadvatanges
        Less control than in a lab experiment.
        Require large number of observations to get statisctically significant results

   Advatanges:
        Donors use their own money.
        Directly relevant to charities
Examples of lab experiments
1.       Do people give more the more they know about the recipients?
         (”sponsor a child”) (Breman and Granström 2006)
           Control group: no information about recipient
           Treatment groups; Foto (1), Information (2), Photo and information(3)
           Outcome?

2.       Do people give more when they can control what the money is
         used for? “Paternalism and corruption” (Breman, Masiye,
         Granström, 2005)
           Control group: Recipient can choose what money is used for
           Treatment group: Recipients are given a gift of the same value as the money
           Outcome?
Field experiments
1.       How should charitable giving be subsidized?
          UK: government match private contributions
          US: charitable contributions are tax deductible


2.       Matching versus rebates (Eckel and Grossman 2006)
          Control groups: no subsidy
          Treatment groups: matching (1), rebate (2) (Eckel and Grossman, 2005, 2006)
          Outcome?


3.       Size of match (Karlan and List 2007)
          Control groups: no subsidy
          Treatment groups: small match (1), medium match (2) large match (3)
          Outcome?
Field experiments
1.       Lotteries (List et al., 2006)
           Door-to-door fundraising campaign
           Control group: ask for gift
           Treatment group: Participate in lottery of you give to charity
           Outcome?

2.       Gifts: (Falk, 2005; Carlsson, Stenman, 2006)
           Fundraising by letters (gift = postcard),
           Fundraising at a national park (gift = souvenir)
           Control group: no gift
           Treatment group: one gift (1), two gifts (2)
           Outcome?
Field experiment
1.       Giving over time (Breman, 2006, 2007)
           Telemarketing campaign
           Monthly donors
           Control group: increase monthly contributions immediately
           Treatment group: increase monthly contributions, starting in two months time
           Outcome?


2.       Interaction donor – communicator (Breman, 2007)
           Telemarketing campaign
           Each caller (= communicator) randomly assigned to a donor
           Are women more altruistic than men?
           Do female (male) donors give more to female of male communicators?
           Outcome?
Future Research
   Loyalty: why are donors so loyal? (Average monthly
    donor 13 years)

   Giving Time (Volunteerism)

   Signaling: how re we affected by other people’s
    altruistic behavior?
Conclusions
   Growing research field in economics

   Field experiments preferred methodology
       Relatively easy to implement
       High external value to researcher (compared to lab)
       Direct knowledge to fundraiser

   Interdisciplinary research field: economics,
    psychology, marketing research